Virginia Staff Advises Against Dominion-NextEra Merger Without Key Conditions
The potential $67 billion merger between Dominion Energy and Florida’s NextEra Energy is under scrutiny, with staff from the Virginia State Corporation Commission recommending against the deal unless significant conditions are met. This merger aims to create the largest electric utility in the United States, impacting operations in Virginia and the Carolinas, and requires approval from both state and federal regulators. A three-member commission panel will assess the testimonies related to the case.
Commission staff, who provide independent recommendations but do not decide on the case, have reviewed the merger details. Testimonies, including those from Gov. Abigail Spanberger and Clean Virginia, have already amassed thousands of pages.
Carol Myers from the Commission’s Division of Utility Accounting and Finance criticized the merger proposal in her 201-page testimony, stating it does not meet the Utility Transfers Act. This act requires utilities to demonstrate that public service and rates will remain adequate and reasonable. Myers pointed out that the merger exposes Dominion to additional risks from NextEra’s unregulated businesses.
While the companies have put forth commitments like job protections, customer bill credits, and the creation of new jobs in Virginia, Myers argues these are insufficient to guarantee adequate utility service post-merger. The companies’ promises include holding ratepayers harmless from merger costs and maintaining Dominion Energy Virginia as a separate legal entity. However, these are among the 57 conditions Myers listed, with 25 originating from the companies’ proposals.
A controversial aspect of the proposal involves bill credits for residential customers using 1,000 kilowatt hours monthly, offering $10 credits for four years, excluding data centers. Myers noted this does not justify merger approval but helps ensure cost fairness among data centers.
Myers also suggested “ring-fencing” measures to protect Dominion’s finances if NextEra faces bankruptcy, involving a “bankruptcy-remote special purpose entity.” However, the utilities deemed this unnecessary, arguing it would hinder Dominion’s credit improvement, which could lower borrowing costs for major investments in transmission and generation to meet data center demand in Northern Virginia.
Although ring-fencing measures previously thwarted a 2017 NextEra acquisition of Texas utility Oncor, staff believe the merger’s potential credit benefits for Dominion are outweighed by the financial risks from NextEra’s diverse portfolio. Staff also recommend expanding Dominion’s board by four independent members and clarifying that NextEra Energy Transmission will not own future projects in Dominion’s Virginia territory. Additionally, they advise extending workforce protection requirements for 10 years post-merger.
Governor Spanberger’s Administration Stance
Governor Abigail Spanberger and Chief Energy Officer Josephus Allmond oppose the merger terms as they stand. Through testimony from a policy consultant, they listed essential conditions for the merger, urging the SCC to reject the deal unless 10 specific commitments are addressed or alternative solutions are found regarding ratepayer protections and clean-energy commitments.
Allmond stated in a press release, “With the commitments made in the original filing and supplemental testimony, Dominion and NextEra have not yet satisfied the legal standard that would allow the Commission to approve this transaction.” The administration’s demands include a $29 monthly rebate for four years, a six-year residential rate freeze, and shifting costs to other ratepayer classes to reduce residential costs by 25%.
They propose restructuring Dominion’s financing to lower its rate of return on equity, and forming a “Zero-Carbon Energy Generation Company” separate from the new utility, headquartered in Virginia. They also call for legislative action to establish a state energy efficiency utility and remove Virginia’s rooftop solar cap.
Next Steps in the Merger Process
In response, Dominion and NextEra reiterated their view of the merger as a “generational investment.” “As expected in a proceeding of this size and significance, today’s testimony reflects a wide range of viewpoints and interests. We are reviewing the filings and will address the issues raised through the Commission’s established process,” the statement read.
The review process will continue with rebuttal testimonies and an evidentiary hearing starting Nov. 17. Following this, parties will file post-hearing briefs, and additional hearings may occur if necessary.
Public comments can be submitted until Nov. 12, with telephonic public hearings scheduled for Nov. 5, 9, and 10, and an in-person hearing on Nov. 5 at the SCC’s courtroom in Richmond, 1300 E. Main St.
The commission must reach a decision by Jan. 11, 2027, as state law restricts deliberations to six months.
Reporter Jahd Khalil contributed to this article.
Disclosure: Dominion Energy and Clean Virginia are VPM sponsors.
Original Story at www.vpm.org